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Zesa urged to cut down costs

National power utility, Zesa Holdings (Zesa), has been told to bring its own costs under control before asking business and customers to pay increased tariffs.

A winding queue of people buying electricity vouchers at Zesa offices along Wayne street in Harare - Picture by Kudakwashe Hunda
A winding queue of people buying electricity vouchers at Zesa offices along Wayne street in Harare – Picture by Kudakwashe Hunda

Industry stakeholders yesterday said the looming 49 percent electricity tariff hike would condemn the country into an economic abyss.

“Zesa group needs to be restructured at all levels for cost containment and to match the reduced levels of electricity generation and the current economy,” the Confederation of Zimbabwe Industries (CZI), the Chamber of Mines Zimbabwe, Zimbabwe Farmers Union, Commercial Farmers Union and Zimbabwe Commercial Farmer’s Union said in a joint statement.

“At this stage, the economy of Zimbabwe cannot have cost increases in any of the inputs,” the industry bodies said.

The various economic stakeholders noted that significant cost reduction could be realised within the power utility without necessarily passing on the burden to cash-strapped consumers.

“With pre-payment system now supposedly working, banking halls can be dispensed of and head office overhead can be significantly reduced.

“Taking depreciation and Return on Assets (Roa) out of the revenue required, we find that payroll costs are 32 percent at Zimbabwe Power Company and 20 percent at ZETDC which we believe should be reduced like what is happening in other sectors in the economy,” industry players said.

This comes as the business member organisations recently met to discuss the proposed 49 percent upward review in the electricity tariff proposed by the state utility provider.

“It was clear that every sector represented at the meeting cannot afford any tariff increase, and in fact, some of the companies belonging to these sectors are struggling to pay electricity tariffs at current levels as evidenced by the 1 billion dollars owed to ZETDC by some consumers,” read part of the joint statement.

Industry also expressed concern over the decision taken by government to bring into the tariff equation the emergency power from diesel generation.

“This proposed 200 MW emergency power is coming at a huge cost to the economy. The investment by the economy in this proposed scheme can be better utilised if deployed to give permanent solutions to this energy crisis…

“All imported power is coming from utilities operating in weak currencies, and therefore we believe that the cost thereof should be low, not to cause a review of tariffs upwards,” said the industry bodies.

The ZETDC recently wrote to the Zimbabwe Energy Regulatory Authority (Zera), requesting a tariff hike to raise funds “to procure 200MW capacity from emergency power sources” to cover the electricity shortfall occasioned by low water levels in Kariba Dam.

The proposed tariff is between 12c per kWh and 16c per kWh. Currently, Zesa is selling electricity at 9,86c per kWh, which is thought to be too low compared to regional averages of 14c per kWh.

Zesa told to cut down costsCondemned: Industry sectors have jointly called upon Zesa to restructure before hiking electricity tariff. Daily News